Nine provinces have fuel mixed with 10 per cent ethanol in their gas stations Heilongjiang, Jilin, Liaoning, Jiangsu, Shandong, Henan, Anhui, Hubei and Hebei.

The Chinese-language press said corn contributes about three-fourths of the raw materials used for ethanol making.

Last year, ethanol production used 16 million tons of corn, a growth of 84 per cent from 2001, while the nation's corn output only grew by 21.9 per cent over the same period. China is expected to produce about 15 million tons of ethanol by 2020.

But if it is entirely, or for the main part, obtained from corn, the industrial demand will threaten the nation's annual supply. Corn production was only about 128 million tons last year.

According to the China National Grain and Oil Information Centre, corn prices in Dalian increased a further 30 yuan (US$3.75) per ton this week, after rising from 1,330 yuan (US$166) to 1,530 yuan (US$191) from late October to earlier November.

But as a result of the government's attempt to cool down the market, "the investment craze will soon be over," said Han Xiaoping, CEO of online energy information website www.china5e.com.

Zhou Dadi, former director of the Energy Research Institute of the NDRC, said new investments are likely to begin in plants, that produce ethanol, and do not compete with grain supplies and arable land.

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